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The Truth About The Impact Of Dividend Reinvesting
by Chuck Carnevale of F.A.S.T. Graphs,
What follows will be several examples of different kinds of dividend paying stocks offered in order to provide deeper insight into several commonly held notions. With each example, I will focus on how much return comes from dividends and how much comes from capital appreciation. I will also illustrate the precise benefits and effects of dividend reinvestment as it applies to different types of dividend paying stocks.
How a Landslide Shifts Copper Supply
The U.S. mining industry was dealt a devastating blow as Kennecott Utah Coppers Bingham Canyon Mine experienced a pit wall failure causing a massive landslide with rocks and dirt covering the bottom of the mine pit. Its a miracle no one was hurt due to the vigilance of its owner, Rio Tinto. The landslide is just one example of how quickly and unexpectedly the supply and demand factors facing the red metal can shift, which underscores the need for nimble active management.
Asia's E-Commerce Evolution
by Michael Oh of Matthews Asia,
Korea and Japan have been trailblazers in terms of making the virtual marketplace platform, through which merchants and manufacturers of all sizes can sell goods to consumers, an e-commerce model in Asia. Unlike in the U.S. and Europe, where many retailers sell directly to customers from their own websites and handle the details of commerce themselves, most Asian e-commerce takes place on megasites or virtual markets.
Bank of Japan Surprises Market and Yen Reacts
by Team of Nomura Asset Management,
We recently indicated on March 14, 2013 that we believed the Yen would remain range bound near the level of PPP (purchasing power parity), which we estimated to be between 90 to 95 Yen/USD. We wrote at the time that though currency movements will be affected by various factors, the monetary policies of both Japan and the U.S. are the most important.
Economic Slowdown Halts Equity Rally
by Bob Doll of Nuveen Asset Management,
The latest softness in economic indicators probably means that more consolidation in the equity markets is required before we can advance beyond the recent all-time highs. During March, nearly all of the activity for the S&P 500 was within 1% of 1550. Equities may move lower due to deteriorating technical conditions and the possibility of weak first quarter earnings reports.
Investing for Income? Safe Bets Can be Surprisingly Risky.
by Joe Kringdon of Pioneer Investments,
The recent, seemingly terminal decline in interest rates has been difficult on many investors who have been planning their income needs for the future. Interestingly enough, a wise presenter at a meeting I attended in January* addressed this very point with a wow factor of quite a different nature.
John Hussman ? Why Prospective Returns Are Low
by Robert Huebscher,
Monetary and fiscal policies have driven our economy into an unstable equilibrium, pushing investors into higher-yielding securities, according to John Hussman. But those higher yields are illusory, he said, because corporate profit margins are too high to be sustainable.
PIMCO Cyclical Outlook for Asia: How Leadership Changes Are Shaping Asia's Outlook
For Asia, slow but not slowing global growth will likely keep external demand neutral, and policy developments will therefore help shape the economic outlook. In Japan, we see a significant boost to aggregate demand coming from the concerted monetary and fiscal expansion of the new Abe government. In China, concerns about inflation, housing market excesses, and long-term financial stability are prompting policy restraint that should keep growth below 8% this year.
The Big Lie of COI Referrals
Several weeks ago I responded to an advisors question about increasing center-of-influence (COI) referrals. The advisor was frustrated that seemingly good relationships with COIs were not translating into more referrals. I received a response to that column from Scott Johnson, director of sales and marketing for My Perfect Client, a provider of training programs for financial advisors. Scott shared some interesting insights about his approach to COI referrals and I thought readers could benefit from these ideas.
Good Start to 2013. Domestic Stocks Earn 11% In First Quarter.
2013 stock markets started like 2012 stock markets with a bang. U.S. stock markets kicked off 2013 with a very good 10.7% return. Also like 2012s first quarter, foreign markets didnt fare as well, earning only 3.5% in the quarter. If we merely hold onto these gains for the remainder of the year well do fine.
Cypriot Chaos Assists EU Centralization
by John Browne of Euro Pacific Capital,
Remarks by members of the European Unions elite suggesting that banking deposit seizures may become standard practice appear to have heightened the risk of a European bank run and perhaps even a catastrophic collapse of the euro. Any threat to the euro is a threat to the European publics conception of the Unions manifest destiny. As such, I believe members of the EU elite may be purposefully leveraging the crisis to push for a centralized European banking system to cement the political framework of an EU superstate.
What's Next for U.S. and European Markets?
by Mike Temple of Pioneer Investments,
I was asked recently to provide some color around the state of global fixed income markets as we close out the first quarter of 2013. Of course, one of the more watched situations in the global markets has been Cypruss banking crisis. I wont go into too much depth on the subject here, as my colleague, Cosimo Marasciulo, has recently provided a comprehensive analysis.
The Stockman Backlash
by Peter Schiff of Euro Pacific Capital,
This week, while economists should have been closely considering the implications of the actual bankruptcy of Stockton, California, they instead heaped scorn on the perceived ideological bankruptcy of David Stockman. In other words, Stockman trumped Stockton.
Could Consumers Change Japan's Tide?
by Team of Matthews Asia,
This year, investor attention has focused on Japan and its macroeconomic policy with hopes that rising inflation expectations might spur businesses to invest and consumers to spend. Since Prime Minister Shinzo Abe and Japans ruling Liberal Democratic Party (LDP) regained power late last year and proposed more aggressive monetary policies, including an ambitious inflation target, the yen has weakened more than 20% against the U.S. dollar and more than 15% against the euro.
Every Gold Coin Has Two Sides
Just as every coin has two sides, every data point that doesnt meet expectations usually has an upside somewhere. For instance, although the gold price has fallen with the strengthening U.S. dollar, the yellow metal is appreciating in Japanese yen. So when negative news about the economy came out this week, along with the U.S. Labor Department reporting that the country added only 88,000 jobs in March, investors found reasons to be encouraged.
PIMCO Cyclical Outlook for the U.S.: Back From the Brink
by Josh Thimons of PIMCO,
We expect the largest contributors to U.S. growth this year will be housing and related industries, increases in capital expenditures (albeit from very depressed levels), certain manufacturing sectors, such as the auto industry, and the energy sector. We see roughly 1.7 percentage points of drag on GDP coming out of Washington far less than the four to five percentage points of potential drag had there been no fiscal cliff resolution. We believe the Fed will continue with hyperactive monetary policy, which we now call QE Infinity, that does not have an explicit end date or progr
China's Uncertainties Won't Stop Renminbi's Rise
by Hayden Briscoe of AllianceBernstein,
Recent data releases and the transition to new political leadership have created some uncertainty about Chinas short-term economic outlook. While positive growth surprises are unlikely in 2013, we still think nothing can stop the long-term appreciation of Chinas currency, the renminbi (RMB).
Teachings from Recovered Markets
Domestic indices all-time record highs indicate that U.S. domestic equity markets have largely recovered from the 2008 Great Recession. It may have taken four years but it still seems a remarkable achievement given the Dows low of 6620 in March 2009. It is worth noting that prior highs were attained in an era with a poor savings rate and wide use of levered strategies. The last four years were widely characterized by a low return market mantra and fear of equities stoked by many doomsayers, pundits, and strategists who greeted every upturn with pessimism.
Absolute Return Letter: The Need for Wholesale Change
The seeds of the next crisis have probably already been sown as a consequence of the lax monetary policy currently being pursued. Frustrated with the lack of direction from political leaders, most recently witnessed in the handling of the crisis in Cyprus which was a complete farce, central bankers from around the world are likely to demand change, but politicians will have to be pushed into a corner before they will respond to any such pressure. Hence nothing decisive will happen before the next major crisis erupts.
First Quarter Recap
by Bob Doll of Nuveen Asset Management,
This past month marked the fourth anniversary of the global equity market bottom on March 9, 2009. U.S. stocks have clawed back all of the losses from the Great Recession and are near historical highs. Most other major markets are still well below their 2007 peaks, but have rebounded sharply since last June and look increasingly resilient. However, there is tremendous anxiety about the economic outlook, and many investors fear equities and other risk assets are floating on a sea of liquidity rather than solid fundamentals. We are more constructive and maintain a pro-growth investment stance.
Surprise! 2013 Rally Pales in Comparison to 2012 “Stealth” Rally
Despite the hoopla over first quarter market performance, it paled in comparison to the first three months of 2012. Driven in part by an extremely accommodative Fed, the U.S. economy is gaining traction, but Europe continues to flounder. After their first negative print in three years during the third quarter, S&P 500 companies returned to positive earnings growth in the fourth. A broad, globally diversified portfolio is the best way to balance the desire for wealth accumulation with an appreciation of volatility.
Minor Crisis...Not Too Many Hurt
Cyprus proved, over the last two weeks, that markets often overlook the small stuff. Very few commentators we follow saw any of it coming and the theories that sprang up in the interim (Cyprus as vassal state to Russia, return to the Cypriot pound, imminent EU break up, twin euros in circulation, utter disaster for the economy, German intransigence and Schrecklichkeit) were absurd.
A Q1 Letter to Clients: Why Warren Buffett is Bullish on Stocks
by Dan Richards,
Since 2008, I have posted templates to serve as a starting point for advisors looking to send clients an overview of the year that just ended and the outlook for the period ahead. This quarter’s letter draws on Warren Buffett’s most recent letter to shareholders, and why he is bullish on the US equity market.
ProVise Bullets
As we began 2013 America was looking ahead to President Obamas second term, the passage of a tax bill that raised government revenue significantly, discovering that fourth quarter growth was virtually flat, corporate earnings that had only a few mild surprises to the upside and several to the downside, and finally, an increase in Social Security taxes of 2%. Then the sequester kicked in in early March, a band aid was used to patch the government together until the end of September, and we saw the nervousness the European markets, highlighted by Cyprus.
The Crisis in Cyprus
Over the weekend of March 16, Cyprus announced it was taxing deposits in order to recapitalize its banking system. The proposal, which levied a tax of 9.9% for deposits under 100k and 12.5% for amounts over that level, caused a severe political backlash. The Cypriot legislature would not approve the measure. In the days following, a banking holiday was put in place to prevent banking runs. The Troika (the EU, the IMF and ECB), who approve bailouts for the Eurozone, negotiated into late Sunday, March 24, before reaching a deal.
A Fresh Milestone
by Jeffrey Saut of Raymond James,
Last Thursday the S&P 500 (SPX/1569.19) notched a new all-time causing Ms. Scaggs to pen the aforementioned story in Fridays Wall Street Journal. I was particularly interested in a sentence further down in the article that read, The rally in stocks comes as investors warm up to stocks for the first time in years. That prose sparked memories of an era gone by.
Currency and Emerging Markets: What Can We Expect?
Currency markets are making headlines again after taking a low profile amid the crises and the turmoil in financial markets of the last five years or so. I asked Greg Saichin, Head of High Yield and Emerging Markets Fixed Income Portfolio Management here at Pioneer, to provide his views about what is going on, and what he sees as the drivers of investment flows into emerging markets.
Learnings From the Cyprus Saga
by Carl Tannenbaum of Northern Trust,
There are important differences between the situation in Cyprus and the challenges other southern European nations face that should limit the transfer of financial trauma. The hope remains that the ECBs promise to do whatever it takes to solve the sovereign debt crisis will ultimately settle markets. But access to certain types of ECB support requires reaching agreement on restructuring with the same European officials who have handled the situation in Cyprus so maladroitly.
Market Resilience
After a stellar first quarter performance from US stock markets, which showed impressive resilience to continued headwinds, a pullback is certainly possible but we dont suggest investors who need to add to allocations wait. In a relative world, the US stock market continues to look like an attractive place to invest, although there may also be opportunities in Japan and Europe as well. The upcoming earnings season could tell the story for the market over the next couple of months, but we continue to advocate a long-term point of view and maintaining a diversified portfolio.
On the Fed, the Keystone Pipeline & the War On Jobs
The Fed Open Market Committee (FOMC) met as scheduled last Tuesday and Wednesday to review monetary policy and its massive quantitative easing effort. The official policy statement released at the end of the meeting on Wednesday was little changed from those in previous months.
What Will Drive the Market?
by Charlie Dreifus of The Royce Funds,
The sequester adds to the economic headwinds caused by ending the payroll tax holiday and the boost in tax rates. However, even with the sequester, total federal government outlays will rise this fiscal year. Finally, after more than a month of daily increases for a gallon of unleaded gasoline, prices are now declining. This has been of concern as rising oil and gasoline prices were yet another headwind facing the U.S. economy. (Oil prices have also declined.)
Why Not a Quantitative Target for Quantitative Easing?
by Paul Kasriel of The Econtrarian,
When I should have been practicing my bass guitar in preparation for my band class Thursday evening, I, instead, watched the first few minutes of Federal Reserve Chairman Bernankes post-FOMC press conference. A number of press inquiries were related to adding specificity to the FOMCs criteria for modifying its current $85 billion per-month purchases of securities. In the short time that I watched the press conference, Chairman Bernanke did not seem to satisfy the press on this issue.
You Can't Be Serious
I admit to being surprised by Cyprus. Oh, not the banking crisis or the sovereign debt crisis or the fact that its banks were eight times larger than the country itself or even the fact that the banks were bloated with Greek debt that had been written down. I wrote about all that a long time ago. What surprised me was that all the above was apparently a surprise to European leaders.
What Happened to That Export-Led Recovery?
With nearly 50% of the UKs total exports going to Europe, an economic area constantly flirting with its own recession, it is no surprise to see that UK trade performance has been challenged.As the US continues to re-heal, and trade becomes more geographically diversified, we should see exports start to grow once more, albeit off a modest base. The easing in sterling is undoubtedly welcome and will improve prospects for exports, but it is unlikely to be a game changer.
Adapting the Yale Model for Clients
The Yale University endowment fund is one of the most successful in the country, with a 10-year return besting the endowment universe average return by 300 basis points and the Wilshire 5000 return by 400 basis points. David Swensen is the architect of this program, and his guiding principles are widely used to manage large endowments. They are equally useful for client portfolios.
Throw the Book at Him
On February 2, Ground Hog Day, Punxsutawney Phil failed to see his shadow forecasting, and as legend has it an early spring. Yet on the first day of spring, I looked out my back window at a lake still more than half frozen with my view partially obscured by a wicked little snow flurry. So much for forecasts!
Currencies in a Race to Debase
by Chris Maxey, Ryan Davis of Fortigent,
Since the start of the year, investors have seen rapid shifts of sentiment in currency markets. The debasement that for so long was assumed to be a purely Western phenomenon is beginning to impact countries globally, driving changes in expected returns and growth prospects.
A Cry for Help from Income Investors
Confronted with the stark realities of income investing now, affluent investors all over the world are rethinking their approach, notes Legg Masons just-released Global Income Survey. Yet the Survey also found income investors hungry for more knowledge and ideas -- creating opportunities for savvy financial advisors.
The Stimulus Trap
by Peter Schiff of Euro Pacific Capital,
For years we have been warned by Keynesian economists to fear the so-called "liquidity trap," an economic cul-de-sac that can suck down an economy like a tar pit swallowing a mastodon. They argue that economies grow because banks lend and consumers spend. But a "liquidity trap," they argue, convinces consumers not to consume and businesses not to borrow. The resulting combination of slack demand and falling prices creates a pernicious cycle that cannot be overcome by the ordinary forces that create growth, like savings or investment.
In Gold We Trust
Poorly thought out government policies hurt the formation of capital and destroy people?s trust in paper money. Leaders may have good intentions, but some of their actions show disrespect for private property and individualism. This only reemphasizes gold as an important asset class.
Power of Positive Screening: Pursuing Strength of Social and Financial Returns
Market volatility and sweeping changes to mainstream views of investing are catalyzing acceptance of tactics that combine fundamentals with a progressive outlook on social issues. Positive screening brings balanced companies to the fore of the investment landscape: this practice isolates sound equities that demonstrate strength of balance sheet, dependability of management, and a commitment to act as part of a global community focused on positive change.
The Constancy of Dividends
The payout ratio on the S&P 500 Index currently hovers around 30% of the after-tax profits of companies in the indexat the low end of the last 100 years. In comparison, the capital appreciation portfolio here at Smead Capital Management has a payout ratio of 27%. This is important because most studies show that over 40% of the returns provided by common stocks come from dividends over long stretches of time. With those figures in mind, we reasoned that this is a good juncture to remind everyone about our vision of the next ten years as it pertains to dividends.
Will the Real Unemployed Please Raise Your Hands?
This weeks letter will be a very short part of a book I am writing with Bill Dunkelberg (the Chief Economist of the National Federation of Independent Businesses) on the future of employment. It has taken longer to write than I initially anticipated, for a host of reasons, chief among which is that the future is not as obvious as I originally thought. Diving into the data has brought a few surprises.
Results 9,501–9,550
of 10,168 found.
